As we continue to celebrate 2022, many of us have left-over to-do lists from the prior year. This week is the best week, to review those lists, toss some of them, and use others to create a plan to improve your businesses profitability and efficiency! As construction attorneys focusing on the business needs of our clients, we have some experience suggesting improvements for our clients’ business, so let us help you put together some resolutions for the construction professional!

Improve Your Construction Contracts:

It does not matter whether you are project developer, a general contractor, or a subcontractor, your construction contracts need to be reviewed and updated. In fact, this may be the single, biggest obstacle to having a more profitable construction company. There are things which anyone can do themselves to improve their contracts (and we encourage this); but other items may need professional advice. This may take a little bit more planning, but an improved contract can lower the high-stakes risks of the modern construction project, it can mitigate damages in the event that the project does not go as smoothly as anticipated, and good contracts can even be used incentivize savings on a construction project (creating a win-win scenario for the project participants). Some common provision to review include the following:

Transfer of risk associated with the construction, COVID-19, supply chain interruptions, etc;
Indemnification and/or hold harmless provisions;
Liquidated damages provisions;
Damages for delay provisions;
Jurisdiction and venue (choice of law) provisions;
Deadline and delivery methods;
Mitigation of damages;
Create procedures which encourage collaboration and transparency amount the project participants;
Dispute resolution provisions (mandatory mediation and/or arbitration)

Perform Better Due Diligence:

Prior to entering into any contract, it is wise for the parties to confirm the track-record of the other parties; thus, every owner and every contractor should develop and implement a thorough due diligence system for vetting new relationships. Items which should be considered may include the following:

Obtain history of past project-size and performance;
Include developer’s lender in conversations;
Perform materialmen lien check on prior projects;
Include party or project specific contract terms;
Evaluate the need for a preliminary lien;
Require a payment bond;
Require a performance bond;
Interview prior project participants; and
Deep-dive Goggle research

Identify and Mitigate Problems and Potential Problems Early:

When a mole-hill becomes a mountain, it is likely too late to make all the necessary corrections needed for a successful project; however, if your employees understand the need for identifying–and, more importantly professionally addressing–problems early, then these issues may be generally avoided. Things to think when creating this year’s to-do may include the following:

How to identify a potential issue;
Develop the strategy/method for solving any issues;
Develop a remediation plan;
Be careful about allocating blame in the early stages;
Create a transparent and collaborative job site;
Consider contract terms regarding disputes and best practices for resolving disputes which might include informal discussions, a problem-solving committee, mediation, etc.); and
Contract only with true professionals (see comments about due diligence, above);

Prevent Payment Issues:

Construction margins are slim, and almost everyone in the industry requires a consistent cash-flow in order to survive. Nonetheless, payment issues arise on every scale of project, and they can cause a construction company to close its doors if they are not resolved in a timely manner. Some things to consider for the new year include training staff to help reduce the amount of interruptions to your cash-flow by considering some of the following items:

Include options in your construction contract available to you in the event of non-payment;
Consider adding interest to past-due amounts;
Obtain personal guaranty/guarantees (yes, we have seen these on Owner Agreements and Subcontract Agreements);
Know your state’s Prompt Payment Act Provisions and train your employees on compliance;
Monitor Accounts Receivables closely;
Send prompt and timely notices for non-payments;
File Preliminary Notices of Lien when in doubt;
File Notices to Owners and Notices to Contractors;
Make a timely Payment Bond Claim (Miller Act claim);
File a mechanics and materialmen’s lien prior to the deadline;
In Georgia, use only the statutory interim lien waiver form;
In Georgia, use only the statutory final lien waiver form; and
Monitor lien deadlines and lien waiver deadlines separately.

Train Employees

Employees generally appreciate training that help them do their job better. Today, there are many mediums through which employees can be better trained at low-to-no costs. Our construction lawyers, for example, regularly provide live training to employees, but we also have training webinars on construction law available online which include such topics as

Georgia mechanics and material men’s lien law compliance;
Payment bond claims (Miller Act and Little Miller Act claims);
How to deal with price escalation in the current construction market;
Georgia’s Statutory notice Scheme; and
The use of construction experts in construction litigation.

In addition, we also offer a free down-load of a 28-page Basic Introduction to Georgia Construction Law. (And, if you contact us, we will be glad to send you professionally printed copies of the handbook).

Conclusion:

Take the first week of January to brain-storm how your can make your construction business more profitable and your employees more efficient. Consider our suggestions for your New Year’s resolutions, and then take the time to make the improvements which you have identified so that 2022 will be a great year for your company and the construction professionals with which you work.

Contractors 2022 New Years Resolutions